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  • 10 Net capital losses carried forward to later income years

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Note:

    • Do not include tax losses, film losses or foreign source losses carried forward to later income years at item 10.
    • Tax losses carried forward to later income years are shown at item 5, and foreign source losses at Part E-Foreign source losses.
    • Net capital loss has the meaning given by sections 102-10 and 165-114 of ITAA 1997.
    • The head company must keep a record of its net capital losses and account for any adjustments including those made by the ATO. These records must be retained for five years after a CGT event has occurred or the losses recouped, whichever is the later.
    • If required, the head company must be able to demonstrate not only the balance of any net capital losses being utilised or carried forward, but also how those net capital losses arose.

    Group

    Show at label S the amount of group net capital losses carried forward to later income years under section 102-15 of ITAA 1997. Group net capital losses are those net capital losses that have been generated by the consolidated group.

    Show transferred net capital losses carried forward to later income years at either label T or U, as appropriate.

    Concessional

    Show at label T the amount of concessional net capital losses carried forward to later income years under section 102-15 of ITAA 1997. Concessional net capital losses are net capital losses that meet certain conditions and may be utilised by the head company over three years, subject to the general loss recoupment tests as modified.

    For more information see the information on Part A - Tax losses and net capital losses consolidated, item 8.

    If the head company wishes to use the concessional method it must choose to do so by the day it lodges its income tax return for the income year in which it first uses any of its transferred losses. The choice, if made, must be for all eligible losses in a particular bundle. Where a head company has not made a choice whether to use the concessional method in respect of transferred losses meeting the relevant conditions, show the amount of these losses carried forward to later income years at label U.

    Other transferred

    Show at label U the amount of other transferred net capital losses carried forward to later income years under section 102-15 of ITAA 1997. Other transferred net capital losses are net capital losses that have been made outside the consolidated group and transferred into the group from an entity when it joined the group. Where a choice has been made to use the concessional method in respect of eligible transferred losses, show the amount of these losses at label T.

    Total

    Show at label V the total of net capital losses carried forward to later income years at labels S to U.

    Transfer the amount at label V to the corresponding label on your tax return.

    Example 12

    XYZ consolidated group comes into existence on 1 July 2002. On that date, net capital losses of $2,100 are transferred to the head company from joining entities which satisfy the continuity of ownership and control transfer tests. No other losses are transferred to the head company. XYZ group determines that $1,200 of the net capital losses transferred satisfy the conditions for use of the concessional method and the head company makes a valid choice to apply this method for all the eligible losses. The balance of the losses transferred ($900) are to be utilised applying the available fraction method.

    For the 2002-03 income year, the head company of the XYZ group is able to utilise $600 of the transferred net capital losses $400 using the concessional method and $200 using the available fraction method.

    The head company completes part A, item 10 on the schedule as follows:

    Label

    Code

    Amount ($)

    Group

    G

    0

    Concessional

    H

    800

    Other transferred

    I

    700

    Total

    R

    1,500

     

    End of example
    Last modified: 30 Jul 2003QC 27493